US Mortgage Rates Move Higher, Again

From Mortgage Rate Newsletter.

Mortgage rates moved higher for the 5th time in the past 6 business days.  The past 2 days have combined to bring rates a full .125% higher.  That’s the increment by which rates are most commonly divided (i.e. 4.0, 4.125%, 4.25%, etc.).  Under normal circumstances rates might move that much over 2 weeks as opposed to 2 days.  In fact, it happened twice in this most recent cycle (Jan 18/19, and Jan 24/25).  The only time we see rates moving any faster is during major blowouts like the weeks following the election or the 2013 taper tantrum.

The average lender is once-again quoting 4.25% on top tier conventional 30yr fixed scenarios.  This isn’t the first time we’ve seen 4.25% this year, but closing costs are slightly higher today.  That means effective rates are at 2017 highs.  Several lenders are already up to 4.375% and a scant few remain at 4.125%.

In the bigger picture, the recent weakness suggests a trend toward higher rates is taking shape after markets paused and corrected heading into mid-January.  This trend would have its most severe implications if rates break above mid-December’s highs, and it’s safest to assume that’s where we’re headed until/unless we see a big shift in the other direction.  Bottom line: early January was a nice break in the storm.  We knew the move toward lower rates would run out of steam at some point before retracing too many of the steps taken in late 2016.  The past few days increasingly confirm that break is over.

Author: Martin North

Martin North is the Principal of Digital Finance Analytics

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